Bulgaria, Russia Make Breakthroughs in South Stream Talks

Date: 07.07.2010

Bulgaria and Russia have made important breakthroughs in the negotiations for the construction of the South Stream gas transit pipeline on Bulgarian soil, the Economy Ministry announced in a special statement.

After the Russian Deputy Prime Minister Viktor Zubkov visited Sofia Tuesday for energy talks, both Bulgaria and Russia announced an improvement in the bilateral dialogue on the three large-scale energy projects – the South Stream gas transit pipeline, the Burgas-Alexandroupolis oil pipeline, and the Belene Nuclear Power Plant – as well as on negotiating new natural gas trade conditions with the Russian company Gazprom.

Zubkov, who is also the Chair of the Board of Directors of Gazprom, and the Bulgarian Prime Minister Boyko Borisov have also announced that the experts of the two sides are working on very clear-cut and specific road maps for the construction of the South Stream pipeline and the Belene Nuclear Plant.

According to the statement of the Bulgarian Minister of Economy, Energy, and Tourism Traicho Traikov, the greatest breakthrough achieved Tuesday in the Bulgarian-Russian talks on South Stream has to do with the use of the existing Bulgarian gas pipeline network.

While the Russians originally demanded that there should be little new construction of South Stream on Bulgarian soil, and Bulgaria wanted brand new pipes running parallel to its existing domestic gas network, Borisov and Zubkov have hammered out a compromise entailing transiting part of the South Stream gas volumes through the Bulgarian pipes already in place.

Thus, a total of 17 billion cubic meters of the 63 billion to be transited annually through South Stream will go through the already existing Bulgarian pipeline network. The rest of the Russian gas destined for Italy and Central Europe will go through new pipes to be laid on Bulgarian territory in east-west direction.

Bulgaria’s Economy and Energy Minister Traicho Traikov has explained that the country will not lose any transit fees by allowing the use of its domestic pipelines, and will actually raise them because this decision will allow increasing the South Stream transit capacity. At present, using these pipes, Bulgaria transits 17 billion cubic meters of Russian gas to Greece and Turkey annually.

The newly-built pipes will be owned 50 % by the Bulgarian government, and 50 % - by the Gazprom consortium for the construction and operation of the future pipeline.

The road map for South Stream is expected to be signed on July 16 during a meeting of Minister Traikov and Deputy CEO of Gazprom Alexander Medvedev in Varna. Russian Deputy PM Zubkov also announced the date earlier but did not specify who will be participating in the high-level meeting.

“Russia and Bulgaria have mutual interest in the realization of the South Stream pipeline. Russia is interested to have it go through Bulgaria because this is the best route in terms of economic and strategical feasibility. Bulgaria is interested in it because it helps its energy security and will bring it transit fees. Our country has always underscored that the South Stream pipeline is important for it, and that our government is working actively for its realization,” Economy Minister Traikov is quoted as saying.

The South Stream gas transit pipeline is expected to be ready in 2015 and to transport Russian and Caspian gas through the Black Sea and Bulgaria to Italy and Central Europe. In Bulgaria it is supposed to split in two – to Greece and Southern Italy and to Northern Italy and Central Europe.

As the energy talks between the Bulgarian government and Russia stalled in the spring of 2010, especially as far as the Burgas-Alexandroupolis oil pipeline and the Belene NPP are concerned, there have been increasing speculations that Gazprom might go for building South Stream through Romania instead of Bulgaria.

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